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life and health > Life and Health > Flashcards

Life and Health Flashcards

1
Q

means to make a person whole by restoring that person to the same financial position that existed before the loss.

A

indemnify

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2
Q

2 types of risk

A

pure

speculative

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3
Q

means that there is only a chance of loss-loss may or may not happen. insurable risk

A

pure risk

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4
Q

involves both an uncertainty of loss and gain. not insurable risk

A

speculative

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5
Q

immediate specific event causing loss and giving rise to risk. it is the cause of risk.

A

peril

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6
Q

any factor that gives rise to peril

A

hazard

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7
Q

5 methods for dealing with risk

A 
STARR
sharing
transfer
avoidance
reduction
retention
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8
Q

entitles one who has paid for another’s loss to take over the other’s right to recourse from the party responsible for the loss.

A

subrogation

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9
Q

the max amount the insurer will pay for a specified insured contingency.

A

limit of liability

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10
Q

the number of days an insured must be disabled before disability income benefits become payable.

A

elimination period

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11
Q

means that within a specified coverage range, the insured and insurer will share allowable expenses.

A

coninsurance

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12
Q

what are the three major sources that insurance is provided to the public?

A

private commercial issuers, private non commercial issuers. and the US govt

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13
Q

primary life insurance carriers that exist as social organizations and usually engage in charitable and benevolent activities.

A

fraternal benefit societies

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14
Q

provides a meeting place and clerical services to its members who actually transact the business of insurance.

A

Lloyds of london

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15
Q

term used to describe the individual who is covered by the insurance is?

A

insured

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16
Q

the application of the law of large numbers enables insurers to?

A

estimate the future losses of a class of group of people

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17
Q

the estimation of future losses is more accurate when information is from?

A

a large group

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18
Q

what type of policy is designed to protect against the risk of living too long?

A

life

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19
Q

what kind of insurance company is owned by its shareholders?

A

stock

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20
Q

the abc insurance company is incorporated in alabama. while doing business in texas, it is..

A

a foreign insurer

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21
Q

the abc insurance company is incorporated in mexico. while doing business in texas, it is..

A

an alien investor

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22
Q

self-insurance is an example of which method of handling risk?

A

acceptance

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23
Q

a social device for sprading the chance of financial loss among a large number of people is the definition of?

A

insurance

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24
Q

roger refuses to travel by airplane. roger is managing the risk of being in a plane crash by..

A

avoidance

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25
Q

Three major channels of regulation in the insurance industry are:

A

federal regulation
state regulation
self-regulation

26
Q

insurance agents are appointed by?

A

insurance companies

27
Q

ralph is a producer for hoosier insurance company. his contract states that he is allowed to put the company’s logo on his business cards and the door to his office. this is an example of..

A

express authority

28
Q

Tom has always made a practice of having his policyholders mail their premium checks directly to his home address and forwarding them on to the insurer so that he is aware of anyone missing a payment and can contact policyowners directly if that should happen. His contract does not allow this practice, but the insurer is aware of the actions and has not asked him to stop. This practice is an example of

A

apparent authority

29
Q

Gina accepts the initial premium when she sells an insurance policy and sends it to the company with the application. Nothing in her contract mentions handling of initial premiums. This is an example of

A

implied authority

30
Q

Albert’s life insurance premium is due on the 10th of the month. Because he gets paid at the end of the month, he has always sent the premium in late. The insurer has been accepting his premium this way for 3 years when a new CEO comes in and decides to crack down on late premiums, canceling Albert’s policy for nonpayment of premium. Albert contests this decision legally and gets the policy reinstated. The decision to reinstate the policy is an example of

A

estoppel

31
Q

what element is not necessary for the formation of a valid contract?

A

written document

32
Q

The initial premium payment sent with an application constitutes which part of the insurance contract?

A

consideration

33
Q

Ken has paid only 4 premiums on his health insurance policy when he is hit by a car. The insurance company pays out nearly half a million dollars to cover his treatment and a lengthy stay in intensive care. This is an example of

A

aleatory contract

34
Q

Carol applies for a life insurance policy and pays the initial premium. Carol has

A

made an offer to insurer

35
Q

The insurer looks at Carol’s application and decides to offer Carol a modified policy, including an exclusion Carol did not request. The insurer has

A

made a counteroffer to carol

36
Q

the failure to disclose known facts is

A

concealment

37
Q

When one party may receive much more from the contract than that party gives in exchange, this is known as

A

aleatory

38
Q

Both parties to the contract have an affirmative duty to disclose all information relevant to the contract, whether or not it is requested. This is known as

A

utmost good faith

39
Q

The sum of money the insured pays the insurer in exchange for the benefits provided in the policy is

A

the premium

40
Q

All insurance policies may be canceled at any time by

A

the insured only

41
Q

gross premium formula

A

gross premium = mortality -interest + expenses

42
Q

net premium formula

A

net premium = mortality - interest

43
Q

loss ratio forumla

A

losses / premiums

44
Q

expenses ratio formula

A

operating expenses / premiums

45
Q

the tendency for poor risks to seek and be covered by insurance more often than average risk is..

A

adverse selection

46
Q

An insurance producer analyzed Bonita’s life insurance needs, taking into account Bonita’s net annual salary, her expenses, her current age, and depreciation of the dollar over time. This producer was using

A

the human life value approach to needs analysis

47
Q

An insurance producer analyzed Dwight’s life insurance needs, taking into account the amount of money Dwight anticipated needing for his funeral and the amount of income that would be required to maintain his family’s standard of living in the event of his death, including projected college costs and the costs of supporting his spouse. This producer was using

A

the needs approach to needs analysis

48
Q

Ana wishes to purchase enough insurance to support her husband for the rest of his life if she should die prematurely and then leave a sizeable inheritance for her children upon his death. Which method should be used to calculate the amount of insurance necessary?

A

capital conservation

49
Q

Ken has terminal cancer and wants to access the death benefit of his life insurance policy to pay medical expenses. How might he be able to do this?

A

he may access the funds either through a viatical settlement or by use of the accelerated benefits provision

50
Q

Alice decides to buy a policy. She pays the first premium; the producer issues a receipt and tells her that she is covered immediately, until she is notified that the policy is either issued or declined. What kind of receipt has Alice received?

A

binding receipt

51
Q

Brenda decides that she wants to buy a policy. She fills out the application but wants to examine the policy before actually paying any premium. What kind of receipt will Brenda receive?

A

inspection receipt

52
Q

Camille decides to buy a policy. She pays the first premium, and the producer issues a receipt and tells her that she is covered as long as the policy is issued as applied for. What kind of receipt did Camille receive?

A

conditional receipt

53
Q

Which kind of receipt is most commonly used in life insurance?

A

conditional receipt

54
Q

Insurers sometimes require personal delivery so that

A

the producer can verify the insured’s good health at the time of delivery

55
Q

If payment of a valid death claim is delayed, what is the usual reason?

A

The insurer has not received proper notification of the death

56
Q

Lee applies for a policy, pays the initial premium, and receives a conditional receipt on March 14. On March 15, he passes the medical exam with flying colors. On March 16, an undiagnosed brain aneurysm bursts, killing Lee instantly. On March 17, the insurer receives the results of the medical exam, which includes no information about the aneurysm. On March 19, the insurer receives the notice of claim. The insurer will

A

pay the claim

57
Q

Rich applies for a policy, pays the initial premium, and receives a binding receipt on Friday, September 1. On Monday, September 4, the underwriting department decides not to issue the policy and places the file in a pile for notification letters to be sent out at the end of the week. On Wednesday, September 6, Rich is killed in an auto accident. On Thursday, September 7, the insurer receives the notice of claim. The insurer will

A

pay the claim because a binding receipt ensures coverage until the potential insured is notified of a rejection

58
Q

Brit purchases a policy and tells the producer he wants immediate coverage, regardless of what the underwriting outcome is. To meet Brit’s demand, the producer most likely will accept the premium and

A

set up a temporary insurance agreement

59
Q

A policy may be issued in all of the following ways EXCEPT

A

as an exchange policy, covering someone other than the original applicant

60
Q

Which of the following statements describes the best use of a producer’s time when personally delivering the policy?

A

Mrs. Ritley delivers a policy and restates the advantages of the policy and how it can be amended to meet future insurance needs.

life and health (1 decks)

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